Stock Market what do you think
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesStock Market what do you think
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Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes
6yI'm still relatively new at RE...so can't give advice there... but I spend a lot of time in the stock market (many hours per day writing about stocks/options/gold etc.)
Right now is NOT a good buying time for stocks for small-time investors. This is a good trading environment because of the high volatility. (options especially)
Currently, we just hit the highest volatility EVER RECORDED...even higher than in 2008. Volatility records the expected movement of stocks. The higher it is, the wider the range. Right now, we're still above 60 on the volatility meter. And today, we saw something major...
Volatility went down...and stocks ended 3% down. That hasn't happened in over 10 years. Usually, volatility has gone down when stocks went up (because we were in a bullish market).
Right now, you're "catching a falling knife" as they say.
Everyone right now says "oh, stocks are cheap, buy now." And some are cheap.
Here's the issue...take Delta Airlines. They're in the hole...down over 70% in over a month. Sounds like a good buy? Well, airlines are highly leveraged industries...even if they do get bailed out...they could still go through bankruptcy (again). If you look at the last time they went bankrupt...their stock went from $20 down to $5 (a 75% drop).
Well...they recovered...but they never hit that $20 price point again until 2013. (4 years later from the drop)
And that came with some heavy stock buybacks which propped their stock price up. (Congress won't let that happen again).
As RE investors, we want a return on our money every year. Well, if history happens again...with some of these industries that need recovery...you could be sitting on dead money for a few years waiting for a return.
***
During a bear market, there's an initial 'shock' drop. Then a rapid advancement back.
Then...there's another drop that goes even deeper. It happened in 2018 (a correction), 2008, 2000...
We are still in the shock drop. We'll see a 10%+ rebound soon. Another drop will follow that's deeper. It's at that last drop you want to buy the companies that will bounce back fast.
Yes, buy the companies in travel and entertainment (like Las Vegas), of course bank stocks, at that time too...invest in the ones that have the solid foundation to continue again. Last time airlines crashed, there was a lot of consolidation. Same with banks.
Watch and wait for that to play out.
We all want to 'get in at the bottom'...the stock market isn't going to pop 100% in a day.
You'll get a sense when the bottom is in once the shock is gone...and you start seeing positive economic signs. You'd rather be 3 months late from the bottom than 12 months early.
Also, you'll want to wait until the VIX is below 35 because then you know the markets have calmed. (You can go to CNBC.com and it's on the very top to see it)
134 Replies
- Developer · Atlanta Ga · Member since 2011 · 47 posts · 37 votes6y
@Jay Hinrichs I can relate. I got wiped out in the dot.com crash too. I went mainly cash in mid to late 2019. I just thought the market (after having the longest bull run in history) was getting a little "peaky". I would say I was roughly 70fixed/30equity in February. I started shifting funds back into the market last week. As they say, we can't time the market. My strategy is I move a certain % back into equities every other week. My number is 5%.
I picked up REM today, the REIT ETF, it was getting crushed and has some decent Real Estate Investement Trusts tucked in it. I try not to pick individual stocks. I trade options (selling covered calls and naked puts) on a few bellweathers that I own or either want to own, but I have gotten burned bad twice chasing individual stocks (Dot.com and then oil collapse) so I just deploy my funny money to trying to pick. I went long REM and KBE (Banking ETF).
I think it's a great buying opportunity if you have the stomach to endure the insane fluctuations, but for me, I easeeeeeee in every other Monday with an ETF type stock that tracks a broad market and has a bucket of securities within it. Good luck with any trades!
- Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes6y
@Jay Hinrichs the dividend should stay the same or increase as company grows. If they struggle it could get cut though. It's off the share price so 10% at $10 a share is going to pay out 5% if shares increase to $20.
I used to own MO. The biggest problem with MO is first off smoking rates are decreasing world wide. Secondly they historically have had strong pricing power but due to high taxes tacked on can only make cigarettes so expensive. Eventually people won't buy a $20 pack and will instead roll their own. Plus they made an awful bet on Juul and lost billions on that lol. I would short MO if anything.
- WorldWide · Member since 2016 · 1k+ posts · 1k+ votes6y
Originally posted by @Mike Schomaker:
There are some real steals out there right now! Airline stocks, oil, retailers, and value equities such as Nike, Uber and McDonalds to name a few!
MLPs (pipelines) are getting taken out to the wood shed (i should know)... yields are insane in that space right now. Things are priced as if we quit using oil and gas altogether this year.
- Vendor · Vancouver, WA · Member since 2017 · 65 posts · 31 votes6y
Great thread to come over and read. Literally, the website before coming to BP tonight was my brand new trading account through my bank. I just purchased Sysco which is a huge value right now. Sysco is the company that provides all the restaurants, bars, university campuses all their food. They have plummeted. They also have $2B in free cash sitting around and have already said they will not be accepting bail-out money. In doing my research, I was pretty impressed.
So, after having not purchased stocks on my own in almost 3 decades, I bought some tonight, and will continue to buy more Sysco or the other companies I'm tracking in deliberate amounts over the next month. Dollar Cost Averaging used to my benefit. I'll lose some money (I'm almost 100% sure) over the next few weeks, but it will average out and will be back up pretty nice over the next 3-6 months.
Great topic, and perfect timing.
- Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes6y
Originally posted by @Joe Splitrock:
Originally posted by @Joseph Weisenbloom:
@Matt R. Agreed individual stocks are too risky for my liking. I like to make investments based on the movement of the market as a whole. I’ve been nibbling on vanguard index funds. This provides less risk but also allows me to take advantage of the 30% market drop we have just witnessed.
Normally this is good advice to buy whole market index, but this situation is completely different. Whole market includes retail, restaurant, travel and entertainment. There is not enough bail out money to save these companies. When you buy everything, you are buying winners and LOSERS. In this case big losers, as in bankruptcy. It would be better to focus on segment index that track a subset of the whole market like technology or healthcare.
I guess we will have to disagree. 500 companies would be more diversified than any single sector and in theory less risky. Yes some losers too that is why I mentioned equally weighted, so spread over 500 companies at 1/500th per. This is my unprofessional opinion. Good luck!
- Member since 2019 · 5 posts · 2 votes6y
To anyone who is new to paper assets I would hoard cash and wait for a bottom to form. As many have posted above, once VIX settles and the virus fears are over feel free to buy whatever your heart desires.
To my more sophisticated guys out there i would advise you to drop whatever you are doing and go back and listen to the past 2 months worth of Macro Voices podcasts. Erik Townsend is one of the best in the business and has called this cycle the entire way.
Personally i think today was one heck of a dead-cat bounce. If you listen to any of the reports coming out from italy and madrid we are undoubtedly going to have an enormous healthcare crisis in multiple parts of the country. IMO the market has not even remotely priced in the possibility of NYC hospitals enforcing triage and the utter carnage this virus will have on unemployment and GDP numbers. You can have the printing press running wide open but it is not going to solve the healthcare crisis that is coming and the market will ultimately price that in. The rally might have some legs left to run but they won't last long.
I am looking for ~1600 on the S&P by the end of may. Currently loaded into May/June SPX puts at 1600-2000 strikes. Have limit orders in for acquiring long positions in SPY dollar cost averaging from 2200 level down to 1800. Good luck and God's speed out there.
Ohh P.S. for anyone looking into E&P companies, I would highly recommend checking the hedging positions and balance sheet of any US shale player before buying at these lows. Truth of the matter is a lot of these companies won't be around in 12 months. I saw someone earlier post about buying OXY...PLEASE DON'T...they have an absolute insane amount of debt maturity coming up from the Anadarko purchase and i don't see it ending well. The cleanest shirts in the dirty hamper to me are EOG and PXD. Best balance sheets in the biz and right now cash is king for US shale players. - Rental Property Investor · SF Bay Area, CA · Member since 2014 · 352 posts · 543 votes6y
Originally posted by @Jay Hinrichs:
As someone who currently owns 2 Tesla's and had a 3rd one.. I sure missed that one.. I looked at it at 180.00 all the guys on my pilots forums were like you got to buy it.. and some did I think I said above one guy bought 1 mil worth at 180..
wild times that's for sure..
It's never too late to buy Tesla stock!
I bought tesla stock at $30!!! but then sold it at $33!
I didn't get back in until it was at $330! But then kept buying during a downturn down to $180/share. Sold it around $730.
I am TOTALLY long on this company but I still want to buy low and keep it for the long haul (unless we have another black swan)
- Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes6y
@Jay Hinrichs it's been awesome for me so far. A few companies I bought are up 15 and 20%. Just know it will probably be rocky still. Be ready for continued volatility
- Insurance Agent · Las Vegas, NV · Member since 2019 · 158 posts · 80 votes6y
@Frank Wong those are usually the companies that offer the most opportunity too. If you know how to hedge, there's great opportunity in those types
- Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes6y
@Jay Hinrichs
I went with 60k with UAL (united airlines)at $19 purchase price.
Planing on holding that baby for 2 years or so
I also did but some OXY an oil company at 10.30
All stock, nothing in margin. Never played on margin but that’s another skill I want to learn for the future.
- Property Inspector - Commercial · Member since 2019 · 15 posts · 0 votes6y
Higher risk. Higher reward. Bet the bank on a few fact based decisions. Buy at huge discounted rate currently. Will 10 -20x $ run # on 08 scenerio. Im right. Rockefeller quote paraphrazed. Opportunity when sharks circulling in bloddy waters.
dont panic. Licuidare take $ out stagnate. Wrong
- Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Carlos Gonzalez:
@Jay Hinrichs
I went with 60k with UAL (united airlines)at $19 purchase price.
Planing on holding that baby for 2 years or so
I also did but some OXY an oil company at 10.30
All stock, nothing in margin. Never played on margin but that’s another skill I want to learn for the future.I just sold UAL this morning, after buying when they went to 20..
Will sell Boeing tomorrow as I also bought low.
I do not think air travel will be the same for a while now, & the ones that do make it out even with bailouts could flounder at lower prices for a long, long time. Some, like LATAM in Brazil, will go under IMO, and new players willcome into fold to take market share. Betting on business and personal travel greatly reduced for 18 months and perhaps long term measures taken with fossil fuel crisis a real issue.
Stock wise, I pick blue chips and sit on them forever. A boring long term investor but it's served me well.
A time like this is the time to go in for the long haul but always be cautious with what you think are sure bets like AIRlines, because as previously mentioned, the numbers and debt show they can flounder for a very long time even if they don't go under. I will not be holding any of them long term.During this first drop (and yes, there will be a new drop after this artificial invisible money injected climb), I got in on
UAL - 20 , sold 30
LATAM- short at 5, got out at 2.5
DVN - short at 8.7
BA - 100 , open
EOG - 34, open
HD - 160 , open
PSX - 50 , open , long term hold but very very solid company
DIS - 91 , long term , little nervous about theme parks remaining solvent
BP- 17 , open
TSLA-400 , open
Didn't touch any biotech pharma companies with hopes they find the cure, very much a stab in the dark.and the big one..
TVIX - 135
Ended up selling at 550 and as you saw it went way, way higher than that, but that is something beginner's shouldn't touch as it is not just an inverse of the DOW and can flatten you in a hurry.Flash in the pans like APRN or WAITR I stay away from, sometimes the gimmicks work out but long term you can't monopolize and scale something like food delivery in capitalism unless you invent the tech for the greatest drone ever.
Days like yesterday can make even the biggest amateurs look brilliant, so never rely on them but always cash out on them if you bought during the drop. News cycles and market reactions are my main drivers, and a little technical data to determine the exact point / day I want to sell.
Of course, I'm quarantined and have tons of time to waste. I'll put all my gains into real estate rentals =]
- Investor · Tx, GA · Member since 2019 · 313 posts · 337 votes6y
Originally posted by @Joseph ODonovan:
@Jay C. I'm far from a stock market guru but TVIX is an extremely risky investment. You must have impeccable timing consistently. TVIX is down 99 % from 5 years ago. I would recommend roulette at your local casino before investing $1 in TVIX
LOL, Tvix is not a long term hold stock. It's something you ride short term and you keep your eyes on like a hawk. short term it is very risky and for experienced traders with markers, but long term it is kamikaze.
- Homeowner · Elkridge, MD · Member since 2020 · 14 posts · 2 votes6y
I’d recommend “Money for the Rest of Us” by J. David Stein.
- Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes6y
If folks did what to buy now...but were nervous about dumping a bunch into RE...a good bet is REITs.
At the moment, they're getting hammered due to their leverage and expected shocks to the RE environment.
Whether you believe RE will go down in price or not...we can all agree that we're not looking at the same RE crisis we saw in 2008 (which was directly tied to RE.
***
So if you're looking for good REITS that are cheap right now...I'd recommend:
New Residential (NRZ) ---> They provide capital/mortgages and investments in the financial services industries. The stock is consistently a $12-$16 stock for the past 9 years. It trades under $5. Normally, they yield 12% on their stock (at their $12-$16 price range). Meaning, you could be looking at a 250% profit...plus a 12% return on your money. Currently, the yield is 28%, but likely they'll cut the dividend to shore up capital. They've made a bunch of acquisitions the past few years and so they have a good runway ahead of them as they're now an A-Z mortgage company
Also,
EPR Properties (EPR) ---> They invest in the entertainment of America...amusement parks, theaters, etc.They're trading at their lowest price since the Great Recession. Normally, a $60-$70 stock...trading for $21. On top of that, they have a yield usually around 8-10% (currently 20%+). So a potential 200% runway with 10% yields to boot. This one may take a little longer to get back on its feet...but since it's diversified, it'll be a great income stock.
****
It's usually hard to find PROFIT + YIELD in the market. Usually, you pick one or the other.THis is a unique time to get both.
DISCLAIMER: I am not a financial advisor, so I'm not responsible for any investment decisions you make.
(thought I'd share what I found)
- Member since 2019 · 4 posts · 0 votes6y
If I can make one suggestion on investing in the stock market... It would be do NOT buy stocks at 52 week lows. Only buy stocks hitting 52 week HIGHS. If your not trying to pick certain stocks then just buy the QQQ or SPY. You'll make more doing that then buying 52 week lows in stocks. Stocks I have my watch-list are - GSX, DOCU, PLMR, ZM. All of them are trading at/near a new life time high. I do know stocks very well! I don't know real estate though, and that's why I'm here to learn. #Don'tbuytheDip #ItcouldkeeponDipping :)
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Matt R.:
Originally posted by @Joe Splitrock:
Originally posted by @Joseph Weisenbloom:
@Matt R. Agreed individual stocks are too risky for my liking. I like to make investments based on the movement of the market as a whole. I’ve been nibbling on vanguard index funds. This provides less risk but also allows me to take advantage of the 30% market drop we have just witnessed.
Normally this is good advice to buy whole market index, but this situation is completely different. Whole market includes retail, restaurant, travel and entertainment. There is not enough bail out money to save these companies. When you buy everything, you are buying winners and LOSERS. In this case big losers, as in bankruptcy. It would be better to focus on segment index that track a subset of the whole market like technology or healthcare.
I guess we will have to disagree. 500 companies would be more diversified than any single sector and in theory less risky. Yes some losers too that is why I mentioned equally weighted, so spread over 500 companies at 1/500th per. This is my unprofessional opinion. Good luck!
About 30% of my holdings were in VTI and the rest was split among individual stocks. Although my entire portfolio took a beating, VTI is down significantly more. All my other assets were up significantly from purchase price. I sold out my portfolio and got October 2019 value. If I had 100% in VTI, I would have sold it all at probably 2016 value. Also keep in mind that I said "whole market" in my response and you are talking about S&P 500. That is not a whole market fund, it is targeted at the S&P 500. There is a variety of index funds that are targeted in different areas. I am just saying targeted funds will perform better through this than whole market. I could be wrong, but I just don't see how so many companies can go without income for 6 months without long term repercussions. There is not enough bail out money to make them whole. This is totally different than other recessions, when companies stayed operating, but just at lower output. New game, new rules. Good luck.
- Investor · Phoenix, AZ · Member since 2015 · 346 posts · 170 votes6y
@John Collins
You’re right. Airlines have a lot of debt, super leveraged.
In sure they’ll get a bail out specially that some of them were just barely making some money and expanding routes internationally. They were tapping their credit lines while the banks were reducing them, just this morning the got a bail out but we’ll not know which companies did until 6 months later...
I’ve been playing with the stock market since 3 years ago and have done well. Sold at the peak when I noticed the Downturn and just bought in for long term. Many billionaires are buying now so why not us. Let’s assume there is another drop very soon, if that happens and just ride it. I’m in this for the long term
Hoping UAL goes back up to the $80 price in four years. That’s free and easy money.
I love the stock market and I love real estate as well.
- Savannah, GA · Member since 2018 · 23 posts · 4 votes6y
Great, I bought a lot of Boeing, it capped at almost $400 I bought it at $100. It’ll go back to $400 eventually.
- Flipper/Rehabber · Little Rock, AR · Member since 2016 · 30 posts · 3 votes6y
@Jay Hinrichs still due to come down i believe the pandemic isnt over. But what do i know im just some punk from arkansas 😉
- Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes6y
Originally posted by @Ian Walsh:
No one knows the next tick.
Ian how you holding up.. we are having some deals fall apart because the HML decided to stop funding for the short term. ( we are the seller)
- 6yJoseph ODonovanPro MemberProperty Manager · Ridley, PA · Member since 2017 · 427 posts · 449 votes
@Tony Kim Fyi, the 3 stocks I referenced paying 9 - 12 % dividends were not REIT'S. Altria ($MO) is Big Tobacco, i e. Phillip Morris, John Middleton etc. ($COTY) is in the beauty supply industry and ($CODI) is a diversified group of companies.
- Rental Property Investor · Woodstock, GA · Member since 2017 · 517 posts · 772 votes6y
FUN FACT:
Most major stock market crashes happen in March and October (October due to EOY budget planning...and folks get fired).
(1929, 1987, 2001, 2008, 2018 (correction), Mar 2020).Likely will see another major drop before the EOY.
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